In 2024, U.S. residential property sales hit an all-time low not seen since the mid-'90s.
In 2024, U.S. residential property sales hit an all-time low not seen since the mid-'90s.
Sales of pre-owned homes hit a 27-year low in 2024, as per the National Association of Realtors. With a total of 4.06 million units sold, it fell below 2023's similar lackluster performance.
Last year, the average 30-year fixed mortgage rate reached a peak of 7.22%. After briefly dipping to almost 6%, it ticked up again in recent weeks, touching 7.04% last week and then dropping to 6.96% this week, according to Freddie Mac.
The median price of an existing home has surged for 18 straight months, reaching an all-time high of $407,500 in 2024. In December, the median price stood at $404,400.
Despite the tough buying conditions, there was a bit of momentum at the end of 2024. Existing-home sales increased by 2.2% in December compared to the previous month, reaching a seasonally adjusted annual rate of 4.24 million – the quickest pace since February 2024.
Lawrence Yun, NAR's chief economist, commented, "Home sales in the final months of 2024 displayed a notable improvement despite elevated mortgage rates. Buyers and sellers seem to be acclimating to the higher borrowing costs, aiding the market's recovery."
Job and wage advances, as well as an expansion in housing inventory, have positively impacted the market, according to Yun.
As the story continues to unfold, it's clear that while high mortgage rates and median home prices pose challenges, there's a glimmer of hope in the housing market's recovery and the stabilization of consumer behavior, hinting at a promising outlook for 2025.
Enrichment Data:
- Existing home sales have been recuperating, with substantial increases in recent months. For example, in December 2024, sales saw a 2.2% monthly rise and a 9.3% yearly growth, marking the largest yearly increase since June 2021.
- The recovery is driven by factors like job and wage gains, an increase in housing inventory, and a better understanding of homeownership benefits among consumers.
- High mortgage rates and median home prices, however, continue to pose affordability issues. However, some economists think that buyers and sellers are gradually accepting the higher borrowing costs, contributing to market stabilization.
- Median home prices have continued rising, with a 6.0% increase from December 2023 to $404,400. The Upper-end market has performed relatively well, with sales of homes above $1 million rising by 35% from a year ago.
- Economic factors, such as job gains and wage increases, are supporting the housing market's recovery, despite challenges like high mortgage rates and prices.
- Consumers are adapting to the mortgage rates in the 6-7% range, helping to maintain market stability while increased inventory and improving economic conditions further contribute to positive trends in the housing market.
The business sector might see a positive impact from the stabilization of the housing market, as consumers demonstrate resilience in the face of high mortgage rates and median home prices. The economy as a whole could benefit from the recovery of the housing market, as the increased sales and improved consumer behavior indicate a strengthening economy.